A federal judge in San Francisco issued a temporary restraining order Tuesday, halting Denver-based ap from collaborating with Hearst Corp. on certain business functions in the Bay Area.
Judge Susan Illston, citing concerns about antitrust issues, ruled in favor of Clinton Reilly, a San Francisco real estate investor. He claims in a lawsuit that the Media News/Hearst partnership is anti-competitive.
Illston’s ruling temporarily stops MediaNews and New York-based Hearst from working together to sell national advertising or to consolidate their newspaper distribution networks in the Bay Area. MediaNews has until Dec. 6 to respond.
A trial for the antitrust case is scheduled for April.
MediaNews is the nation’s fourth-largest newspaper publisher and owns The Denver Post. Reilly’s lawsuit followed a $736.8 million deal in April in which Media News purchased the San Jose Mercury News, Contra Costa Times and a number of smaller papers in California from McClatchy Co. of Sacramento, Calif. Federal regulators have approved that deal. On Tuesday, Illston denied Reilly’s request to block MediaNews from making operational changes at those newspapers.
Separately, Hearst agreed in April to buy the St. Paul Pioneer Press and Monterey County Herald from McClatchy for $263.2 million. Hearst agreed to trade those two papers for a 30 percent stake in MediaNews’ assets outside the Bay Area, where Hearst owns the San Francisco Chronicle.
The Hearst transaction with Media News is still undergoing antitrust review by federal regulators.
Reilly’s lawsuit contends that the pact between MediaNews and Hearst could create a newspaper monopoly in the Bay Area that would reduce choices for readers and advertisers. Illston had previously denied a temporary restraining order.
In Tuesday’s ruling, Illston wrote that she was swayed by the discovery of a previously undisclosed April 26 letter from Hearst senior vice president James Asher to Joseph Lodovic, president of Media News.
In the letter, the two companies agreed to negotiate “to offer national advertising and Internet advertising sales for their San Francisco Bay Area newspapers on a joint basis” and to negotiate consolidating their Bay Area distribution networks.
Such potential agreements, “the mere existence of the letter, and the cooperation between Hearst and Media News they reflect, increase the likelihood that the transactions at issue here were anti-competitive, and illegal,” Illston wrote.
Lodovic said Tuesday that there has been no further dialogue between the two companies about shared advertising or distribution.
“So she basically issued an order that has no immediate effect whatsoever,” he said. “There is nothing planned.”
The Associated Press contributed to this report.
Staff writer Will Shanley can be reached at 303-954-1260 or wshanley@denverpost.com.
